<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14
/ / Confidential, for Use of the Commission Only (as Permitted
by Rule 14a-6(e)(2))
Grubb & Ellis Company
(Name of Registrant as Specified in its Charter)
- ------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-
6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction
applies:
(3) Per unit or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth
the amount on which the filing fee is calculated and
state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
[GRUBB & ELLIS LOGO]
One Montgomery Street
Telesis Tower
San Francisco, California 94104
April 6, 1995
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of
Stockholders of Grubb & Ellis Company (the "Company") to be
held at 3:00 p.m. on May 16, 1995 in the Yosemite Room of The
Clift Hotel, 495 Geary Street, San Francisco, California.
For your consideration at the meeting is the election of
six directors to the Company's Board of Directors. The meeting
will also provide an opportunity to review with you the
business of the Company during 1994 and give you a chance to
meet your directors.
Your vote is important to the Company. Whether or not you
plan to attend the meeting, please return a completed proxy
card in the enclosed envelope. If you do attend the meeting
and wish to vote in person, you may withdraw your proxy and
vote your shares personally.
We look forward to seeing you at the meeting.
Sincerely,
/s/ Joe F. Hanauer
____________________________________
Joe F. Hanauer
Chairman and Chief Executive Officer
<PAGE>
GRUBB & ELLIS COMPANY
One Montgomery Street
Telesis Tower
San Francisco, California 94104
____________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held May 16, 1995
The Annual Meeting of the Stockholders of Grubb & Ellis
Company (the "Company") will be held in the Yosemite Room of
The Clift Hotel, 495 Geary Street, San Francisco, California,
on May 16, 1995 at 3:00 p.m. local time, for the following
purposes:
1. To elect six (6) directors to the Board of Directors
to serve for one year and until their successors are
elected and qualified; and
2. To transact such other business as may properly come
before the meeting and any adjournment or
postponement thereof.
Stockholders of record at the close of business on March
23, 1995 will receive this Notice and are entitled to vote at
the Annual Meeting.
Please complete, sign and date the enclosed proxy card and
mail it promptly in the enclosed reply envelope.
BY ORDER OF THE BOARD
OF DIRECTORS
/s/ Robert J. Walner
___________________________
Robert J. Walner
Corporate Secretary
Dated: April 6, 1995
<PAGE>
GRUBB & ELLIS COMPANY
PROXY STATEMENT
SOLICITATION AND REVOCATION OF PROXIES
General Information
The Board of Directors (the "Board") of Grubb & Ellis
Company (the "Company") is soliciting your proxy for the Annual
Meeting of Stockholders (the "Annual Meeting") to be held on
May 16, 1995 at 3:00 p.m. in the Yosemite Room of The Clift
Hotel, 495 Geary Street, San Francisco, California. Only
holders of record of the Company's common stock, $.01 par value
per share (the "Common Stock"), the Series A Senior Convertible
Preferred Stock, $.01 par value per share (the "Series A Senior
Preferred Stock") and the Series B Senior Convertible Preferred
Stock, $.01 par value per share (the "Series B Senior Preferred
Stock," and, together with the Series A Senior Preferred Stock,
the "Senior Preferred Stock") and the Junior Convertible
Preferred Stock, $.01 par value per share (the "Junior
Preferred Stock" and together with the Senior Preferred Stock,
the "Preferred Stock") at the close of business on March 23,
1995 (the "Record Date") will be entitled to vote at the Annual
Meeting. The Common Stock and the Preferred Stock are
sometimes collectively referred to herein as the "Capital
Stock."
Information in this Proxy Statement about the Company's
directors or executive officers is provided only for the
periods during which they held such positions.
Record Date; Voting Rights
This Proxy Statement and the enclosed proxy card are being
mailed on or about April 6, 1995 to holders of the Capital
Stock on the Record Date, who are entitled to notice of and to
vote at the Annual Meeting. On the Record Date, there were
outstanding 8,797,020 shares of Common Stock, 8,894 shares of
Series A Senior Preferred Stock, 128,266 shares of Series B
Senior Preferred Stock, and 150,000 shares of Junior Preferred
Stock. Each of the holders of Common Stock (the "Common
Stockholders") is entitled to one vote for each share of Common
Stock held. The holders of Preferred Stock are entitled to
vote in accordance with the number of shares of Common Stock
into which their shares of Preferred Stock are convertible. As
of the Record Date, the holder of Series A Senior Preferred
Stock was entitled to 332,908 votes in the aggregate, the
holder of Series B Senior Preferred Stock was entitled to
4,828,548 votes in the aggregate and the holder of Junior
Preferred Stock was entitled to 2,674,511 votes in the
aggregate. The total number of votes available at the Record
Date was 16,632,987. The presence, in person or by proxy, of
a majority of the votes which all of the Company's stockholders
("Stockholders") are entitled to cast will constitute a quorum.
<PAGE>
Proxies
When the enclosed proxy is executed, dated and delivered
prior to the date of the Annual Meeting, the shares represented
thereby will be voted by the persons named as proxy in
accordance with your directions. You may revoke your proxy at
any time prior to voting at the Annual Meeting by delivering
written notice to the Secretary of the Company, by submitting a
subsequently dated proxy or by attending the meeting and voting
by ballot before the polls are closed.
The Board is not aware of any matters to be presented at
the Annual Meeting other than the election of directors. If
any other matters are properly presented, the persons named to
act as proxies may vote on such matters in accordance with
their discretion.
The cost of the solicitation of proxies will be borne by
the Company. The Company has engaged Morrow & Co., Inc. to
solicit proxies for a fee of approximately $2,000 plus
reasonable out-of-pocket expenses, estimated to be
approximately $2,000. Banks, brokers and other nominees will
be reimbursed for customary expenses incurred in connection
with forwarding of the Company's proxy solicitation materials
to beneficial holders. In addition, proxies may be solicited,
without additional compensation, by directors, officers and
other regular employees of the Company by telephone, mail or in
person.
Voting Procedures and Required Vote
Shares represented by proxies that reflect abstentions or
"broker non-votes" (i.e., shares held by a broker or nominee
which are represented at the Annual Meeting, but with respect
to which such broker or nominee is not empowered to vote on a
particular proposal or proposals) will be counted as shares
that are present and entitled to vote for purposes of
determining the presence of a quorum. The election of each
nominee for director will require the affirmative vote of a
plurality of the voting power of the shares of Capital Stock
represented at the Annual Meeting and entitled to vote.
Cumulative voting for the election of directors is not
permitted. Unless authority to vote for any director is
withheld in the proxy, votes will be cast in favor of election
of all of the nominees. Votes withheld from election of
directors are counted as votes "against" election of directors.
All shares of Common Stock and Preferred Stock vote together as
one class.
<PAGE>
ELECTION OF DIRECTORS
Information About the Board
The Board of Directors currently consists of six
directors. John Mullman, a representative of The Prudential
Insurance Company of America ("Prudential"), resigned from the
Board in January 1994 and Kenneth E. Field resigned from the
Board in May 1994.
The Board held six meetings during the year ended December
31, 1994. It has standing Audit and Compensation Committees,
which are described below. The Board does not have a
Nominating Committee.
Audit Committee. The Audit Committee is responsible for
recommendation to the Board of the appointment of auditors;
approval of the scope of the annual audit; review of the audit
results and compliance with the auditors' recommendations;
approval of non-audit services performed by the auditors;
review and recommendation with respect to financial reports to
stockholders and internal accounting and auditing controls; and
monitoring compliance with certain aspects of the Company's
conflicts-of-interest policy. The current members of the Audit
Committee are R. David Anacker, Chairman, Lawrence S. Bacow and
Robert J. McLaughlin. The Audit Committee met four times
during 1994.
Compensation Committee. The functions of the Compensation
Committee are the approval of compensation arrangements for the
executive officers of the Company; proposing any compensation
plans, including stock plans, in which directors and officers
are eligible to participate; and administration of the
Company's stock plans and certain other compensation plans.
The current members of the Compensation Committee are Reuben S.
Leibowitz, Chairman, and Lawrence S. Bacow. During 1994, the
Compensation Committee held one meeting and otherwise conducted
its business without formal meetings.
Information About the Nominees for Director
The names of the persons who have been nominated by the
Board for election as directors at the Annual Meeting are set
forth below. There are no other nominees. Nominations for
director are made by written notice to the Secretary of the
Company, generally at least 14 days prior to the stockholders'
meeting at which directors are to be elected. All nominees
have consented to serve as directors if elected.
If any nominee becomes unable to serve as a director, the
proxies will be voted by the proxy holders for a substitute
person nominated by the Board, and authority to do so is
included in the proxy. The Board has no reason to believe that
any of the nominees will be unable to serve as a director of
the Company.
<PAGE>
Stockholders' Agreement. Pursuant to a stockholders'
agreement ("Stockholders' Agreement") entered into in
connection with a financial restructuring and recapitalization
of the Company in 1993 ("1993 Recapitalization"), among the
Company, Warburg, Pincus Investors, L.P. ("Warburg"),
Prudential and Joe F. Hanauer dated January 29, 1993, as
amended, the parties agreed to vote all of their shares of
Capital Stock in favor of the election to the Board of Mr.
Hanauer, one nominee designated by Prudential ("Prudential
Nominee"), two nominees designated by Warburg ("Warburg
Nominees") and such other nominees, not running in opposition
to the Prudential Nominee or to the Warburg Nominees, who
shall have been selected or approved as such by the Board.
Upon notice from Prudential or Warburg, the parties will vote
their shares of Capital Stock in favor of the election to the
Board of one additional Prudential Nominee and one additional
Warburg Nominee. The parties also agreed to vote against
removal of the other party's nominees, exercise each party's
best efforts to cause its representatives on the Board to vote
in favor of a nominee of each other party to fill any vacancy
on the Board created by the resignation, removal or death of
such party's nominee if the effect of failing to so fill such
vacancy would be that there would be fewer than the requisite
number of Prudential Nominees or Warburg Nominees remaining on
the Board, and until the 1995 Annual Meeting, vote all of their
shares of Capital Stock in favor of electing Mr. Hanauer as a
director or against removal of Mr. Hanauer as a director. See
"Compensation Committee Interlocks and Insider Participation"
below. With respect to the 1995 election of directors, Messrs.
Leibowitz and Santoleri have been designated as Warburg
Nominees and Prudential has not designated a Prudential
Nominee.
To the Company's knowledge, Warburg, Prudential and all of
the directors and executive officers of the Company intend to
vote all of their shares of Capital Stock in favor of all
nominees for director. As the holder of a majority of the
outstanding shares of Capital Stock, Warburg has the power,
without the vote of other Stockholders, to elect all nominees
to the Board.
The term of office of each nominee who is elected extends
until the annual stockholders' meeting in 1996 and until his
successor is elected and qualified.
<PAGE>
Joe F. Hanauer, 57, has been Chairman of the Board since
January 1993, Executive Chairman of the Company from June 1994
to September 1994 and Chief Executive Officer of the Company
since July 1994. Since December 1988, Mr. Hanauer has been a
general partner of Combined Investments, L.P., an investment
management business located in Laguna Beach, California, whose
investments include real estate. Since February 1993, Mr.
Hanauer has served as a director of certain subsidiaries of the
Company and until July 1994, through Combined Investments,
L.P., also provided operational and management services to the
Company. From 1977 to December 1988, Mr. Hanauer was
associated with Coldwell Banker Residential Group, Inc.,
serving as Chairman and Chief Executive Officer from 1984.
Since March 1989, he has also been Chairman of the Greyhawk
Corporation ("Greyhawk"), a corporation of which he is a
majority shareholder and which has interests in real estate
brokerage franchising. He is also a director of MAF Bancorp.
Mr. Hanauer was first elected as a director of the Company in
January 1993 pursuant to the Stockholders' Agreement.
R. David Anacker, 59, has been Vice Chairman of Veriflo
Corporation, an industrial equipment manufacturing firm located
in Richmond, California, since November 1991. From November
1959 to November 1991, he was associated with American Building
Maintenance Industries, Inc. ("ABMI"), a property maintenance
service firm located in San Francisco, California, serving as
director from 1979 and as President and Chief Executive Officer
from March 1984 through May 1989. He currently provides
consulting services to ABMI. He served as a director of Axiom
Real Estate Management, Inc., a subsidiary of the Company, from
August 1992 to July 1994. Mr. Anacker was elected as a
director of the Company in May 1994.
Lawrence S. Bacow, 43, is a professor at the Massachusetts
Institute of Technology ("M.I.T.") Center for Real Estate and
the M.I.T. Department of Urban Studies and Planning. He joined
the M.I.T. faculty in 1977 and the M.I.T. Center for Real
Estate in 1983, serving as the director of the Center for Real
Estate from 1990 until 1992. He has been designated as
Chairman of the M.I.T. Faculty, effective June 1995. From
December 1987 to June 1990, he was also a principal of Artel
Associates, a company which provided investment banking
services to real estate companies. Professor Bacow has served
as a director of the Company since January 1993.
Reuben S. Leibowitz, 47, a Warburg Nominee, is a Managing
Director of E.M. Warburg, Pincus & Co., Inc. ("Warburg
Pincus"), a venture banking and investment counseling firm. He
has been associated with Warburg Pincus since 1984. Warburg
Pincus is an affiliate of Warburg, the Company's principal
stockholder. Mr. Leibowitz is also a director of Chelsea GCA
Realty, Inc. and Pacific Greystone Corporation. Mr. Leibowitz
was first elected as a director of the Company in January 1993
as a representative of Warburg pursuant to the Stockholders'
Agreement.
Robert J. McLaughlin, 62, is President of The
Sutter Group, a management consulting firm located in Larkspur,
California which he founded in 1982. Mr. McLaughlin has
served as a director of the Company since September 1994.
<PAGE>
John D. Santoleri, 31, a Warburg Nominee, has been a Vice
President of E.M. Warburg, Pincus & Co., Inc. ("Warburg
Pincus") since January 1995, a Vice President of Warburg Pincus
Ventures, Inc., the venture banking subsidiary of Warburg
Pincus, since 1991, and has been associated with Warburg Pincus
since June 1989. From June 1985 to June 1989, he was
associated with The Harlan Company, a New York-based real
estate consulting firm, serving as Vice President from
September 1988 to June 1989. Warburg, Pincus Ventures, Inc.
is an affiliate of Warburg, the Company's principal
stockholder. Mr. Santoleri also serves as a director of
Chelsea GCA Realty, Inc. and Pacific Greystone Corporation.
Mr. Santoleri was first elected as a director of the Company in
January 1993 as a representative of Warburg pursuant to the
Stockholders' Agreement.
Information Concerning Executive Officers
In addition to Mr. Hanauer, the following are executive
officers of the Company:
John F. Carpenter, 47, has been President of the Company's
Pacific Northwest Region and a Senior Vice President of the
Company since October 1992, and has been Executive Director of
Institutional and Corporate Accounts of the Company since March
1995. From September 1990 to September 1992, he was President
and Chief Executive Officer of Real Estate Investment Trust of
California, located in Los Angeles, California. He was
previously associated with the Company as a district manager
from January 1987 to August 1990. He joined the Company as a
salesperson in 1979.
Robert J. Hanlon, Jr., 48, has been Senior Vice President
and Chief Financial Officer of the Company since December 1993.
Prior to joining the Company, Mr. Hanlon, who is a Certified
Public Accountant, was employed by Prudential for over 23
years, serving as Senior Vice President and Chief Financial
Officer of its affiliate, Prudential Capital Corporation, from
1985 through 1989 and as Executive Vice President, Finance and
Administration, of Prudential's affiliate, Prudential
Relocation Management, from 1990 through 1993.
Steven F. Pope, 46, has been Senior Vice President and
Director of Marketing of the Company since June 1994. Prior to
that time, he was associated with the Commercial Investment
Real Estate Institute, a real estate professional society and
training firm located in Chicago, Illinois, serving as
Executive Vice President from November 1984 to June 1994.
Phillip D. Royster, 51, has been President of the
Company's Pacific Southwest Region since January 1992 and a
Senior Vice President of the Company since May 1990. He has
been Executive Director of the Retail Services Group of the
Company since March 1995. Mr. Royster was President of the
Company's California Region from January 1990 to January 1992,
and a Senior Vice President of the Company's commercial
brokerage division from February 1984 to May 1990.
<PAGE>
Robert J. Walner, 48, has been Senior Vice President,
Secretary and General Counsel of the Company since January
1994. From August 1992 to January 1994, Mr. Walner was engaged
in a private law and consulting practice, and was of counsel to
Lawrence Walner & Associates, Ltd. in Chicago, Illinois, a law
firm specializing in state and federal class action litigation
on a national basis. From November 1979 to August 1992, he was
Senior Vice President, General Counsel and Secretary of The
Balcor Company, a subsidiary of American Express Company.
<PAGE>
Neil R. Young, 46, has been President of the Company's
Eastern Region since March 1994, President of the Midwest/Texas
Region from January 1993 to January 1995, when the region was
reorganized as part of the Eastern Region, and a Senior Vice
President of the Company since January 1992. Mr. Young, who
has been Executive Director of the Industrial Services Group
and the Corporate Services Group of the Company since January
1995, has been with the Company since 1983, serving prior to
1993 as an Executive Vice President, Regional Manager, district
manager and sales manager of the commercial brokerage division
in the Midwest Region.
The Board unanimously recommends that the Stockholders
vote FOR the election of all nominees to the Board of
Directors.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table sets forth information as of February
15, 1995 concerning beneficial ownership of Common Stock by
known beneficial holders of more than 5% of the outstanding
Common Stock, directors, named executive officers, and all
current directors and executive officers as a group. Unless
otherwise noted, the listed persons have sole voting and
dispositive powers with respect to the shares held in their
names, subject to community property laws if applicable.
<TABLE>
<CAPTION>
Amount and Nature of
Beneficial Ownership Percent of Class(1)
____________________ ___________________
<S> <C> <C>
Warburg, Pincus Investors, L.P.
466 Lexington Avenue
New York, NY 10017 10,118,339(2)(5) 69.1%
The Prudential Insurance
Company of America
Four Gateway Center
Newark, NJ 07102 3,422,060(3)(5) 28.9%
Joe F. Hanauer
Grubb & Ellis Company
One Montgomery Street
Telesis Tower
San Francisco, CA 94104 767,741(4)(5)(6)(7) 8.1%
R. David Anacker 5,000(8) *
Lawrence S. Bacow 7,467(6)(7) *
John F. Carpenter 3,639(6)(7) *
Robert J. Hanlon, Jr. 5,400(6)(7) *
Reuben S. Leibowitz 0(2) --
Robert J. McLaughlin 3,000 *
Phillip D. Royster 3,872(6) *
John D. Santoleri 0(2) --
Wilbert F. Schwartz 218 *
Robert J. Walner 14,000(6)(7) *
Neil R. Young 7,052(6) *
All current directors and executive
officers as a group (12 persons) 817,171(6)(7) 8.6%
* Does not exceed 1.0%.
_____________________________
<FN>
(1) Percentages total more than 100% due to the
requirement to count derivative securities for certain
purposes. The percentage of shares of Common Stock
beneficially owned by each designated person assumes that
no other person exercises currently outstanding
warrants, options or convertible securities.
<PAGE>
(2) At February 15, 1995, Warburg beneficially owned
10,118,339 shares of Common Stock through its ownership of
(i) 4,277,433 shares of Common Stock, (ii) 128,266 shares
of Series B Senior Preferred Stock which are convertible
into an aggregate of 4,828,548 shares of Common Stock and
(iii) currently exercisable warrants to purchase an
aggregate of 1,012,358 shares of Common Stock.
The sole general partner of Warburg is Warburg, Pincus
& Co., a New York general partnership ("WP"). E.M. Warburg,
Pincus & Company, a New York general partnership that has
the same general partners as WP ("E.M. Warburg"), manages
Warburg. Lionel I. Pincus is the managing partner of WP
and E.M. Warburg and may be deemed to control them. WP has
a 20% interest in the profits of Warburg and, through
its wholly-owned subsidiary, E.M. Warburg, Pincus & Co.,
Inc. ("Warburg Pincus"), owns 1.13% of the limited
partnership interests in Warburg. Mr. Leibowitz, a
director of the Company, is a Managing Director of Warburg
Pincus and a general partner of WP and E.M. Warburg. As
such, he may be deemed to be a beneficial owner of an
indeterminate portion of the shares of Common Stock
beneficially owned by Warburg, Warburg Pincus and WP. He
disclaims any such beneficial ownership. Mr. Santoleri, a
director of the Company, is a Vice President of Warburg
Pincus, an affiliate of Warburg. Mr. Santoleri
disclaims beneficial ownership of any shares of Common
Stock beneficially owned by Warburg.
(3) At February 15, 1995, Prudential beneficially owned
3,422,060 shares of Common Stock through its ownership of
(i) 397,549 shares of Common Stock, (ii) 150,000 shares of
Junior Preferred Stock which are convertible into an
aggregate of 2,674,511 shares of Common Stock, and (iii)
currently exercisable warrants to purchase an aggregate of
350,000 shares of Common Stock.
(4) At February 15, 1995, Mr. Hanauer beneficially owned
767,741 shares of Common Stock, through his ownership of
the following securities held in a trust of which Mr.
Hanauer is the trustee and he and his wife and children
are beneficiaries: (i) 42,306 shares of Common Stock,
(ii) 8,894 shares of Series A Senior Preferred Stock
convertible into an aggregate of 332,908 shares of Common
Stock, (iii) currently exercisable warrants to purchase an
aggregate of 310,571 shares of Common Stock, (iv) an
option which, as of February 15, 1995, was exercisable for
45,000 shares which was granted under a Company stock
option plan; and (v) warrants to purchase 36,956 shares
of Common Stock, which will be exercisable only in the
event the Company pays certain liabilities after January
29, 1993 which exceed an aggregate of $1,500,000
("Contingent Warrants"). Such Contingent Warrants, which
expire in January 1998, have an aggregate exercise price
equal to the lesser of the amount by which such excess
liabilities exceed $500,000 or $5.00 multiplied by the
number of shares issuable upon exercise, and will be
exercisable by Mr. Hanauer for a period of 90 days.
(5) Pursuant to the rules promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange
Act"), Prudential, Warburg and Mr. Hanauer may be deemed
to be a "group," as defined in Section 13(d) of such Act.
Prudential, Warburg and Mr. Hanauer do not affirm the
existence of such a group and disclaim beneficial
ownership of shares of Common Stock beneficially owned by
any other party.
<PAGE>
(6) Includes options under the Company's stock option plans
which are, or by April 16, 1995 will be, exercisable for
the following numbers of shares: Mr. Hanauer -- 45,000;
Professor Bacow -- 6,667; Mr. Carpenter -- 3,000; Mr.
Hanlon -- 3,000; Mr. Royster -- 3,000; Mr. Walner --
4,000; Mr. Young -- 3,000; and all current directors and
executive officers as a group -- 67,667.
(7) Includes shares held by spouses and/or children of the
following: Professor Bacow -- 800; and Mr. Carpenter --
20. Includes shares held jointly with spouses as follows:
Mr. Carpenter -- 20; and Mr. Hanlon -- 2,400. Includes
shares held in trust for the benefit of immediate family
members as follows: Mr. Hanauer -- 42,306; Mr. Walner --
10,000.
(8) Includes shares held as of March 6, 1995.
</TABLE>
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Exchange Act requires the
Company's directors, executive officers, chief accounting officer
and persons who beneficially own more than ten percent of a
registered class of the Company's equity securities, to file
with the Securities and Exchange Commission and the New York
Stock Exchange reports of ownership and changes in ownership
of Common Stock and other equity securities of the Company.
Such persons are required to furnish the Company with copies
of all such forms they file. To the Company's knowledge, based
solely upon review of copies of such reports furnished to the
Company and written representations that no other reports were
required, during the year ended December 31, 1994, all Section
16(a) filing requirements applicable to the above-referenced
persons were complied with, except that James E. Klescewski,
Corporate Controller, filed a Form 5 late which disclosed the late filing
of a Form 3, and Mr. Anacker filed a Form 5 late which reported
one transaction.
<PAGE>
EXECUTIVE COMPENSATION
Compensation of Executive Officers
The following table sets forth, for all persons who served
as Chief Executive Officer in 1994 and for each of the other
executive officers of the Company as of December 31, 1994,
compensation earned, including deferred compensation, for
services in all capacities with the Company and its
subsidiaries for the fiscal years ended December 31, 1994,
1993, and 1992. Two additional tables provide information
about these persons' stock options.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
Securities
Underlying All Other
Name and Salary Bonus Options/SARs Compensation
Principal Position Year ($) ($) (#)(1) ($)
__________________ ____ ______ _____ ____________ ____________
<S> <C> <C> <C> <C> <C>
Joe F. Hanauer 1994 90,000 200,000 0 90,000
Chief Executive Officer(2) 1993 0 0 135,000 165,000
1992 -- -- -- --
Wilbert F. Schwartz 1994 125,000 0 0 133,000
Former President and Chief 1993 211,000 0 400,000 0
Executive Officer(3) 1992 -- -- -- --
Neil R. Young 1994 171,000 124,000 0 0
Senior Vice President and 1993 220,000 69,000 15,000 2,000(4)
President of the Eastern 1992 103,000 80,000 5,000(5) 0
Region
Robert J. Hanlon, Jr. 1994 175,000 70,000 15,000 0
Senior Vice President and 1993 -- -- -- --
Chief Financial Officer 1992 -- -- -- --
John F. Carpenter 1994 171,000 60,000 0 0
Senior Vice President and 1993 171,000 9,000 15,000 1,000(4)
President of the Pacific 1992 39,000 0 0 0
Northwest Region
Robert J. Walner 1994 140,000 56,000 20,000 0
Senior Vice President, 1993 -- -- -- --
General Counsel and 1992 -- -- -- --
Corporate Secretary
Phillip D. Royster 1994 171,000 20,000 0 0
Senior Vice President 1993 159,000 8,000 15,000 1,000(4)
and President of the 1992 160,000 20,000 2,000(5) 0
Pacific Southwest Region
<PAGE>
___________________________________
<FN>
(1) The amounts represent options to purchase the designated
numbers of shares of Common Stock.
(2) Mr. Hanauer has served as Chief Executive Officer since
July 1994, and as Chairman of the Board since January
1993. All other compensation represents amounts earned
pursuant to a consulting agreement with the Company prior
to Mr. Hanauer's election as Chief Executive Officer. See
"Compensation of Directors."
(3) Mr. Schwartz served as President and Chief Executive
Officer from February 1993 to July 1994. All other
compensation relates to his severance agreement.
(4) Represents Company contributions to the 401(k) plan
accounts of the designated individuals.
(5) These options were canceled in 1993 pursuant to a
repricing program. The repriced options are included in
the 1993 grants of options.
</TABLE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of
Stock Price Appreciation
Individual Grants For Option Term(1)
Number of Percent
Securities of Total
Underlying Options/SARs Exercise
Options/SARs Granted to or Base
Granted(2)(3) Employees in Price Expiration 5% 10%
Name (#) Fiscal Year ($/Sh) Date ($) ($)
__________________ _____________ ____________ ________ __________ ___ ___
<S> <C> <C> <C> <C> <C> <C>
Joe F. Hanauer 0 -- -- -- -- --
Wilbert F. Schwartz 0 -- -- -- -- --
Neil R. Young 0 -- -- -- -- --
Robert J. Hanlon, Jr. 15,000 43% $3.125 Jan. 1, 2002 $29,000 $75,000
John F. Carpenter 0 -- -- -- -- --
Robert J. Walner 20,000 57% $3.125 Jan. 1, 2002 $39,000 $100,000
Phillip D. Royster 0 -- -- -- -- --
____________________________________
<FN>
(1) The potential realizable value is calculated from the
market price per share, assuming the Common Stock
appreciates in value at the stated percentage rate from
the date of grant of an option to the expiration date.
Actual gains, if any, are dependent on the future market
price of the Common Stock.
(2) The amounts represent options to purchase the designated
numbers of shares of Common Stock.
(3) The options of Messrs. Hanlon and Walner were granted on
January 1, 1994 under the 1990 Amended and Restated Stock
Option Plan, as amended. The options were each granted at
market value on the date of grant, and vest in five, equal
annual installments commencing one year from the date of
grant. Vesting accelerates upon certain conditions
related to changes of control of the Company or at the
discretion of the Compensation Committee.
</TABLE>
<PAGE>
Stock Options Granted in 1995
On January 4, 1995, options to purchase the designated
numbers of shares of Common Stock were granted, at an exercise
price of $1.875 per share, under the 1990 Amended and Restated
Stock Option Plan, as amended, to the following named executive
officers: Joe F. Hanauer (102,850 shares), Neil R. Young
(40,000 shares), Robert J. Hanlon, Jr. (40,000 shares), John F.
Carpenter (25,000 shares), Robert J. Walner (40,000 shares),
and Phillip D. Royster (15,000 shares). The option granted to
Mr. Hanauer has an eight-year term, vests in three, equal
annual installments commencing one year from the date of grant,
and vests earlier upon the termination of Mr. Hanauer's
services as a director. The other options, which also have
eight-year terms, vest in five, equal annual installments
commencing one year from the date of grant. Vesting of all
options accelerates upon certain conditions related to changes
of control of the Company or at the discretion of the
Compensation Committee.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END
OPTION/SAR VALUES
<TABLE>
<CAPTION>
Shares Number of Securities Value of Unexercised
Acquired on Underlying Unexercised In-the-Money Options/SARs at
Exercise Options/SARs at FY-End(#) FY-End($)
Name (#) Value Realized($) Exercisable/Unexercisable Exercisable/Unexercisable(1)
_____ ___________ _________________ _________________________ ____________________________
<S> <C> <C> <C> <C>
Joe F. Hanauer -- -- 45,000/90,000 --
Wilbert F. Schwartz -- -- -- --
Neil R. Young -- -- 3,000/12,000 --
Robert J. Hanlon, Jr. -- -- 3,000/12,000 --
John F. Carpenter -- -- 3,000/12,000 --
Robert J. Walner -- -- 4,000/16,000 --
Phillip D. Royster -- -- 3,000/12,000 --
________________________________________
<FN>
(1) The value of unexercised in-the-money options at fiscal
year-end was calculated based on the closing price of the
Common Stock as reported on the New York Stock Exchange on
December 31, 1994 ($2.00 per share).
</TABLE>
<PAGE>
Compensation of Directors
Only directors who are not employees of the Company and
who are neither holders of five percent or more of the Capital
Stock of the Company ("Five-Percent Holders") nor employees or
affiliates of entities which are Five-Percent Holders ("Outside
Directors"), receive compensation for serving on the Board and
on its committees. Such compensation currently consists of an
annual retainer fee of $15,000 and a fee of $1,000 for each
Board or committee meeting attended. These fees are set by the
Board.
In addition, under the 1993 Stock Option Plan for Outside
Directors, Outside Directors each receive an option to purchase
10,000 shares of Common Stock upon the date of first election
to the Board, with an exercise price equal to market value on
such date.
Pursuant to an agreement, effective from February 1, 1993
to June 1, 1994, between the Company and Combined Investments,
L.P., a company of which Mr. Hanauer is the general partner,
Mr. Hanauer devoted a substantial amount of his working time
providing operational and management services to the Company
for compensation of $15,000 per month plus expenses. During
1994, Combined Investments, L.P. earned $90,000 under such
agreement. The agreement was terminated in June 1994 upon
Mr. Hanauer's election as Executive Chairman of the Company.
See the "Summary Compensation Table" above.
Employment Contracts and Termination of Employment and Change-
In-Control Arrangements
Mr. Schwartz was elected President and Chief Executive
Officer of the Company on February 24, 1993, receiving an
annual salary of $250,000, and eligibility for incentive
compensation in an amount of up to 60% of his salary at the
discretion of the Compensation Committee. Mr. Schwartz
resigned his positions with the Company in July 1994. In
connection with his resignation from such positions, Mr.
Schwartz received severance compensation equal to one year's
base salary and continued health benefits for one year. Mr.
Schwartz previously owned 1,193 shares of senior preferred
stock convertible into an aggregate of 39,586 shares of Common
Stock, warrants to purchase an aggregate of 6,090 shares of
Common Stock, and Contingent Warrants to purchase 3,480 shares
of Common Stock, which he acquired from Warburg and Mr. Hanauer
in 1993. In connection with his resignation, Mr. Schwartz sold
all such securities to Warburg and Mr. Hanauer for the same
purchase price that he paid upon acquisition of such
securities.
Mr. Walner, Senior Vice President, General Counsel and
Corporate Secretary, is entitled to receive severance
compensation in an amount equal to up to nine months' salary
and reimbursement of certain out-of-pocket expenses under
certain circumstances relating to the location required for
performance of his services, in the event that he resigns from
employment with the Company.
<PAGE>
Compensation Committee Interlocks and Insider Participation
The members of the Compensation Committee of the Board
("Compensation Committee") are Reuben S. Leibowitz (Chairman)
and Lawrence S. Bacow. John Mullman, a previous member of the
Compensation Committee, resigned from the Board effective
January 31, 1994. None of the members of the Compensation
Committee has served as an officer or employee of the Company.
Mr. Leibowitz is a Managing Director of E.M. Warburg,
Pincus & Co., Inc., an affiliate of Warburg. Mr. Mullman is a
Vice President, Corporate Finance of Prudential. Warburg and
Prudential entered into certain agreements with the Company in
connection with a recapitalization in 1993 and a financial
restructuring in 1994 as described below.
1993 Recapitalization.
On January 29, 1993, the stockholders of the Company
approved a financial recapitalization and restructuring of debt
(the "1993 Recapitalization"), pursuant to which Warburg, for a
purchase price of $12,850,000, purchased (i) 128,266 shares of
newly issued senior preferred stock, (ii) five-year warrants
initially to purchase 340,000 shares of Common Stock, at an
exercise price of $5.00 per share (the "$5.00 Warrants"),
(iii) five-year warrants initially to purchase 142,000 shares
of Common Stock, at an exercise price of $5.50 per share (the
"$5.50 Warrants," and, together with the $5.00 Warrants, the
"1993 Warburg Warrants"), and (iv) Contingent Warrants to
purchase 373,818 shares of Common Stock. Also pursuant
to the 1993 Recapitalization, Mr. Hanauer, for a purchase
price of $900,000, purchased (w) 8,894 shares of newly
issued senior preferred stock, (x) $5.00 Warrants initially
to purchase 160,000 shares of Common Stock, (y) $5.50 Warrants
initially to purchase 58,000 shares of Common stock and (z)
Contingent Warrants to purchase 26,182 shares of Common Stock.
<PAGE>
Pursuant to the 1993 Recapitalization, the Company and
Prudential agreed to restructure the Company's $5-million
revolving line of credit (the "1991 Revolving Credit Note"),
$10 million of 9.90% Senior Notes due November 1996 (the "Old
Senior Notes") and $25 million of 10.65% Subordinated Notes due
November 1996 (the "Old Subordinated Notes") then held by
Prudential. Prudential and the Company entered into a Senior
Note, Subordinated Note and Revolving Credit Note Agreement
(the "1993 Note Agreement") pursuant to which the Company
issued to Prudential (i) a new $5-million Revolving Credit Note
due December 31, 1994 (the "1993 Revolving Credit Note") upon
cancellation of the 1991 Revolving Credit Note, (ii) $10
million of the Company's 9.9% Senior Notes due November 1, 1996
(the "1993 Senior Notes") upon cancellation of all of the
outstanding Old Senior Notes and (iii) $10 million of the
Company's 10.65% Subordinated Payment-in-Kind Notes due
November 1, 1999 (the "PIK Notes") upon cancellation of $10
million of the Old Subordinated Notes. The 1993 Revolving
Credit Note, the 1993 Senior Notes and the PIK Notes are
sometimes collectively referred to herein as the "Prudential
Debt." In addition, prior to the 1993 Recapitalization,
Prudential held a warrant (the "Old Prudential Warrant") to
purchase 397,549 shares of Common Stock at an exercise price of
$7.30 per share, which Prudential exercised through the
cancellation of approximately $1,982,000 of the accrued and
unpaid interest on the Old Subordinated Notes and cancellation
of approximately $920,000 of PIK Notes. In addition,
Prudential, in exchange for the cancellation of $15 million of
Old Subordinated Notes, purchased (x) 150,000 newly issued
shares of Junior Preferred Stock and (y) five-year warrants
initially to purchase 200,000 shares of Common Stock at an
exercise price of $5.50 per share (the "1993 Prudential
Warrants"). The 1993 Warburg Warrants, the 1993 Prudential
Warrants, and the $5.00 Warrants and $5.50 Warrants held by Mr.
Hanauer are sometimes collectively referred to herein as the
"Existing Warrants."
<PAGE>
As part of the 1993 Recapitalization, Warburg, Prudential,
Mr. Hanauer and the Company entered into the Stockholders'
Agreement, which provides for the nomination of up to three
persons for election as director by Warburg and up to two
persons for election as director by Prudential. Pursuant to
the Stockholders' Agreement, Mr. Leibowitz was nominated for
election as a director by Warburg, and Mr. Mullman was
nominated for election as a director by Prudential. Mr.
Mullman has resigned from the Board. See "Information About
the Nominees for Director" above.
1994 Recapitalization.
During 1994, the Company entered into agreements with
Warburg and Prudential in order to restructure its indebtedness
with Prudential and provide new financing. The financing
transactions were approved by the Stockholders, including a
majority of the Stockholders other than Warburg and Prudential
who voted at the meeting, in September 1994. The 1994
financing transactions are referred to herein as the "1994
Recapitalization."
Bridge Loan. During March 1994, the Company and Warburg
entered into an agreement pursuant to which Warburg loaned the
Company $6 million in interim financing, at an initial interest
rate of 5% per annum with a maturity date of April 28, 1995
(the "Bridge Loan"). The largest aggregate amount of
indebtedness under the Bridge Loan was $6,159,000. On November
1, 1994, the Bridge Loan was retired, along with accrued
interest, in connection with a sale of rights to acquire Common
Stock of the Company. See "Rights Offering and Standby
Commitment" below. The loan was secured by the Company's
commercial brokerage revenues through a cash collateral
account. Prudential also had a lien on the cash collateral
account which was subordinated to Warburg's lien.
Waiver by Prudential. Also during March 1994, in order
to facilitate the completion of the 1994
Recapitalization, Prudential waived certain covenants
with respect to the outstanding Prudential Debt until the execution
of the amendment to the 1993 Note Agreement described below.
<PAGE>
Restructuring of Indebtedness to Prudential. On November
1, 1994, the Company and Prudential amended the 1993 Note
Agreement with respect to the 1993 Senior Notes, the PIK Notes
and the 1993 Revolving Credit Note to provide that (i) $15
million principal amount of the Senior Notes, the PIK Notes and
the 1993 Revolving Credit Note which would have been due from
1994 through 1996 will be deferred and no principal payments
will be required until November 1, 1997, and thereafter (A) the
1993 Revolving Credit Note will mature November 1, 1999, (B)
principal on the 1993 Senior Notes will be payable in two,
approximately equal installments on November 1, 1997 and 1998,
and (C) principal on the PIK Notes will be payable in two,
approximately equal installments on November 1, 2000 and 2001,
(ii) the interest rate on the PIK Notes will increase from
10.65% to 11.65% per annum on January 1, 1996, (iii) the
temporary repayment requirements applicable to the 1993
Revolving Credit Note and certain covenants relating to working
capital, cumulative operating losses and capital expenditures
will be ineffective until April 1, 1997, (iv) the Company will
be required to maintain a ratio of EBITDA (as defined in the
1993 Note Agreement) to total interest expense equal to or
greater than 2:1 on a rolling 12-month basis as of April 1,
1997 and quarterly thereafter, (v) the Company will be required
to make supplemental debt payments commencing in 1998 if the
Company generates certain levels of cash flow, (vi) the Company
is permitted to make up to $5 million of loans and advances to
its salespersons against future commissions and guarantees of
such loans and advances, and (vii) certain other restrictions
and covenants are eliminated or waived by Prudential.
<PAGE>
Rights Offering and Standby Commitment. The 1994
Recapitalization included a rights offering pursuant to which
the Company issued to holders of the Common Stock, for each share
of Common Stock held, a non-transferable right to acquire one
share of Common Stock, at an exercise price of $2.375 per
share (the "Rights Offering"). Subject to certain conditions,
the holders of Common Stock also had certain rights to
oversubscribe to the extent that other such holders did not
subscribe. Warburg agreed to acquire the Common Stock
reserved for issuance, and not acquired by the holders of
Common Stock, in the Rights Offering, at a price of $2.375 per
share, subject to a maximum number of shares that would result
in an aggregate purchase price paid by Warburg being equal to
$10 million plus accrued interest on the Bridge Loan at the
time of its retirement (the "Standby Commitment"). A total of
84,542 shares of Common Stock were purchased in the Rights
Offering, including 21,153 shares purchased by Mr. Hanauer's
family trust. Pursuant to the Standby Commitment, Warburg
purchased 4,277,433 shares of Common Stock, paid for through
the cancellation of outstanding principal and interest under
the Bridge Loan in the amount of approximately $6,159,000, and
$4,000,000 in cash.
Amendments to Existing Warrants. Pursuant to the 1994
Recapitalization, the Existing Warrants were amended,
including the following:
<PAGE>
Warrants Held by Warburg. The Contingent Warrants
held by Warburg were canceled, the exercise prices of the
1993 Warburg Warrants were reduced to $3.50 per share and
certain of the anti-dilution provisions of the 1993
Warburg Warrants were eliminated with respect to future
stock issuances. As a result of the 1994
Recapitalization, upon application of the anti-dilution
provisions, the number of shares issuable upon
exercise of the 1993 Warburg Warrants was increased from
a total of 482,000 to 687,358 shares of Common Stock.
Warrants Held by Prudential. The exercise price of
the 1993 Prudential Warrants was reduced to $3.50 per
share, and the expiration date of such warrants was
extended from January 29, 1998 to December 31, 1998.
Certain of the anti-dilution provisions of the 1993
Prudential Warrants were eliminated and the number of
shares of Common Stock issuable upon exercise thereunder
did not change.
Amendments to Preferred Stock. Pursuant to the 1994
Recapitalization, the Company's Certificate of Incorporation
was amended to modify the terms of the Senior Preferred Stock
and the Junior Preferred Stock.
Redemption Provisions. The mandatory redemption
provisions of the Preferred Stock were eliminated, except
that under certain limited circumstances the Company may
be required to redeem the Junior Preferred Stock in
connection with an underwritten public offering of the Common Stock.
Anti-Dilution Provisions. Certain of the anti-
dilution provisions of the Senior Preferred Stock held by
Warburg were eliminated with respect to future
transactions and certain of the anti-dilution provisions
of the Junior Preferred Stock held by Prudential were
eliminated. Upon consummation of the Rights Offering and
upon application of the anti-dilution provisions, the
conversion price of the Senior Preferred Stock held by
Warburg and the number of shares of Common Stock issuable
upon conversion were adjusted.
<PAGE>
Dividend Rate. The Junior Preferred Stock was
amended to increase the cumulative dividend rate
effective January 1, 2002 from 5% to 10% per annum with
further increases of 1% per annum effective January 1,
2003 and January 1, 2004 and 2% per annum effective
January 1, 2005 and each January 1 thereafter. The Senior
Preferred Stock, which entitles the holders to receive
cumulative dividends at the rate of 12%, was amended so
that at such time as the dividend rate on the Junior
Preferred Stock would increase above 12%, the dividend
rate on the Senior Preferred Stock would increase by the
same amount. Effectively, the dividend rate on the Senior
Preferred Stock will increase by 2% per annum effective
January 1, 2005. The Preferred Stock is subject to
mandatory conversion under certain limited circumstances,
pursuant to which the Preferred Stock would be converted
to Common Stock. The conversion price of the Preferred
Stock is not subject to adjustment for accrued but unpaid
dividends and upon conversion the dividends are no longer
payable.
New Warrants. As consideration for the Standby
Commitment, the Company issued to Warburg warrants to purchase
325,000 shares of Common Stock at an exercise price of $2.375
per share (the "1994 Warburg Warrants"). As consideration for
modifying the 1993 Note Agreement, waiving noncompliance with
certain covenants and agreeing to the other transactions
contemplated by the 1994 Recapitalization, the Company
issued to Prudential warrants to purchase 150,000 shares of
Common Stock at an exercise price of $2.375 per share (the "1994
Prudential Warrants" and together with the 1994 Warburg
Warrants, the "New Warrants"). Any or all of the New Warrants
may be exercised at any time until five years after the date
of issuance. The other terms of the New Warrants are the same
as the terms of the Existing Warrants, after giving effect to
the amendments to the Existing Warrants discussed above
(including the elimination of certain of the anti-dilution
provisions).
Amendment to Stockholders' Agreement. The Stockholders'
Agreement, which contains agreements among Warburg, Prudential
and Mr. Hanauer with respect to voting for the election of
directors and grants to Warburg, Prudential and Mr. Hanauer
certain registration rights with respect to the securities
received by them in the 1993 Recapitalization, was amended
effective November 1, 1994, to provide, among other things, that
Warburg and Prudential have the same registration rights for
the Common Stock issuable upon exercise of the New Warrants and
any shares of Common Stock acquired by Warburg, Mr. Hanauer
or Prudential, as the case may be, in connection with the Rights
Offering. The Common Stock issuable upon exercise of the New
Warrants and the Common Stock acquired by Warburg and Mr.
Hanauer in connection with the Rights Offering is subject to
the voting requirements of the Stockholders' Agreement. See
"Information About the Nominees for Director" above.
<PAGE>
Payment of Fees and Expenses of the 1994
Recapitalization by the Company. During 1994, the Company paid
approximately $73,000 of the legal expenses of Prudential in
connection with the 1994 Recapitalization.
Other Related Party Transactions with Prudential. As a
significant institutional investor in real estate, Prudential
utilizes the services of the Company (and its competitors) on a
regular basis. In the ordinary course of business, Prudential,
its affiliates and franchisees paid the Company approximately
$2.1 million during 1994 for management of several of its
properties and for leasing and other real estate commissions.
The Company also rents office space in the ordinary course of
business under a long-term lease from a partnership of which
Prudential is a general partner, paying approximately $1.1
million in rent during 1994. A limited partnership which is
affiliated with the Company is a partner in a joint venture
formed to develop an office building in southern California.
As a permanent financing for the project, the joint venture
borrowed $5.8 million on a non-recourse basis from Prudential
in September 1990, secured by an unamortized first mortgage on
the property, at a rate of 10.02% per year and a term maturing
in September 1995.
Notwithstanding anything to the contrary set forth in any
of the Company's filings under the Securities Act of 1933, as
amended, or the Exchange Act, that might incorporate other
filings, including this proxy statement, in whole or in part,
the following Compensation Committee Report and the section
entitled, "Stock Price Performance" shall not be incorporated
by reference into any such filings.
<PAGE>
Compensation Committee Report on Executive Compensation
The Compensation Committee has furnished the following
report on executive compensation:
The Compensation Committee has developed and implemented
compensation policies, plans and programs which seek to reward
achievement of positive financial results for the Company, and
thus enhance stockholder value. Providing longer-term equity
incentives has been an important additional method of aligning
closely the financial interests of the Company's senior
officers with those of its Stockholders.
In order to attract and retain outstanding executives with
the potential to contribute significantly to the success of the
Company, the Compensation Committee's policies have sought to
compensate executives commensurate with "market" rates.
"Market" refers to the geographic market of the position and
the services market of the position, and also to the market for
executives with similar responsibilities in the commercial real
estate brokerage industry, but does not include companies in
the Peer Group of companies referred to below under "Stock
Price Performance."
Due to the current financial volatility in the real estate
services industry, the fixed salaries of executives generally
represent a smaller portion of total compensation than might
otherwise have been the case, and the cash incentive
compensation that may be earned may be designated as a larger
percentage of total compensation. The Compensation
Committee's policies include the objective of assuring
qualification of each executive's compensation for
deductibility under Section 162(m) of the Internal Revenue Code
of 1986, as amended (the "Code"), which section generally
imposes a $1 million cap on deductibility for any taxable year
of the compensation for each of the chief executive officer and
the other four most highly compensated executive officers.
<PAGE>
During 1994, executive officers were eligible to receive
compensation consisting of three components: base salary, cash
incentive compensation and longer-term equity incentives. The
Compensation Committee reviewed with the Chief Executive
Officer the compensation of all executive officers (except that
the compensation for the Chief Executive Officer was reviewed
in his absence). Base salaries were approved on the basis of
the Compensation Committee members' knowledge of comparative
salaries within the real estate brokerage services industry and
judgments about the executives' individual past performance,
level of responsibilities and expectations of future
performance. In setting base salaries, the level of an
executive's responsibilities was given the greatest
consideration. The cash incentive compensation was based upon
attainment of annual goals and was earned as a percentage of
salary. The eligibility to receive such cash incentive
compensation was based upon achievement of targeted levels of
total revenue and profitability of the Company, and, with
respect to Regional Presidents, achievement of targeted levels
of revenue and profitability of the applicable region and
attainment of individual performance goals related to staffing,
productivity and expense controls. No one factor was a
prerequisite to receiving incentive compensation.
Stock options are designed to align the interests of
executives with those of Stockholders, and further the growth,
development and financial success of the Company. The
Compensation Committee believes that granting equity incentives
to the Company's management helps retain and motivate
management. In determining the grants of stock options, the
Compensation Committee takes into account the respective scope
of responsibility and the anticipated performance requirements
and contributions to the Company of each proposed optionee. In
addition, stock options are awarded from time to time in
connection with hiring executives. The Compensation
Committee's decision to award equity incentives at the time of
hiring is based upon the circumstances of a particular hiring,
including the level of responsibility of the executive. All
incumbent executive officers who held office during 1994 have
received options to purchase Common Stock of the Company, with
exercise prices set at fair market value at the date of grants,
vesting over periods ranging from three to five years. The
determination of the numbers of shares underlying the equity
incentives provided to each executive was made by the
Compensation Committee, primarily based upon the executive's
level of responsibility.
<PAGE>
Mr. Hanauer was elected as Executive Chairman of the
Company effectiveas of June 1, 1994 and as Chief Executive
Officer as of July 1, 1994, in addition to serving as Chairman
of the Board. His compensation during 1994 consisted of a base
salary of $15,000 per month and eligibility for additional
incentive compensation in either cash or equity, as determined
by the Compensation Committee. The Compensation Committee
granted to Mr. Hanauer an option to purchase 102,850 shares of
Common Stock on January 4, 1995 at an exercise price of $1.875
per share, in lieu of additional compensation for base salary
with respect to the year 1994. In March 1995, the Compensation
Committee awarded to Mr. Hanauer $200,000 as incentive compensation.
Both the option grant and the cash award were made in order to
provide Mr. Hanauer with appropriate compensation related to
his responsibilities as Chief Executive Officer, and in recognition
of his contribution toward achievement of the Company's strategic
and financial objectives with respect to the year 1994.
Mr. Schwartz, who was elected as President and Chief
Executive Officer in February 1993, resigned effective July 1,
1994. His compensation during 1994 consisted of a base salary
agreed upon by the Compensation Committee and Mr. Schwartz at
the time he was hired.
THE COMPENSATION COMMITTEE
Lawrence S. Bacow
Reuben S. Leibowitz
<PAGE>
Stock Price Performance
The following graph shows a five-year comparison of
cumulative total stockholder return on the Company's Common
Stock against the cumulative total return on the S&P 500 Stock
Index and a Peer Group of the Company. The graph also
includes the SIC Code Group (as described below). The
comparison assumes $100 was invested on December 31, 1989 in
each of the foregoing and that all dividends, if any, were
reinvested. To the best knowledge of the Company, its most
significant competitors are privately held commercial real
estate brokerage firms, and therefore the Company was unable to
construct a Peer Group containing companies whose sources of
revenue and business are substantially similar to those of the
Company. The Peer Group was formed by selecting those public
companies with the same company-level Standard Industrial
Classification ("SIC") Code as the Company as reported by Media
General Financial Services, and which are not real estate
investment trusts ("REITs"). The Company's company-level SIC
Code is 6531, which relates to real estate agents and managers.
The Company believes that the stock price performance of a
REIT will be typically quite different than that of a real
estate services company like the Company, because a REIT must
meet specified requirements regarding organizational structure
and ownership, sources of income, types of assets (i.e., a REIT
must invest in interests in real property), distributions and
other items, and is exempt from regular federal corporate
income taxes. The Peer Group companies so selected, in
addition to the Company, are: Dev-Tech Corporation, The DeWolfe
Companies, Inc., Kennedy-Wilson, Inc., Prime Management Group,
Inc. and Westmark Group Holdings, Inc. (formerly named Network
Financial Services, Inc.). With the exception of the Company,
none of such companies was publicly traded prior to May 1990.
The peer group selected for the stock price performance
graph presented in the Company's 1994 proxy statement was
formed by selecting those public companies with the same
company-level SIC Code as the Company's, including REITs (the
"SIC Code Group"). The graph shows the SIC Code Group, which
is comprised of the five companies listed above and the two
REITs which were reported by Media General Financial Services
as having the same company-level SIC Code as the Company:
Commercial Net Realty and Income Opportunity Realty Trust.
Other companies which were included in the peer group
presentation in the 1994 proxy statement, which in 1995 were
not reported by Media General Financial Services as having the
same SIC Code as the Company's, are Hotel Investors Trust (now
named Starwood Lodging), Meridian Point Realty Trust `83,
Meridian Point Realty Trust IV Co., Meridian Point Realty Trust
VI Co. and Meridian Point Realty Trust VII Co. All of these
companies are REITs.
<PAGE>
Comparison of Five-Year Cumulative Total Return*
Grubb & Ellis Company, S&P 500, Peer Group, and SIC Code Peer Group
(Performance results through December 31, 1994)
[Graph]
<TABLE>
<CAPTION>
12/89 12/90 12/91 12/92 12/93 12/94
_____ _____ _____ _____ _____ _____
<S> <C> <C> <C> <C> <C> <C>
Grubb & Ellis $100.00 $27.78 $33.33 $22.22 $14.01 $8.96
S&P 500 $100.00 $96.89 $126.28 $135.88 $149.52 $151.55
Peer Group $100.00 $31.47 $34.86 $17.63 $13.30 $6.47
SIC Code Group $100.00 $35.17 $43.29 $39.94 $39.21 $31.13
</TABLE>
*Total return assumes reinvestment of dividends on a quarterly
basis.
RELATED PARTY TRANSACTIONS
The following are descriptions of certain transactions and
business relationships between the Company and its directors,
executive officers, and principal stockholders. See
"Information About the Nominees for Director" above regarding a
stockholders' agreement, and "Compensation Committee Interlocks
and Insider Participation" above.
<PAGE>
In the ordinary course of business, certain general
partnerships of which Mr. Hanauer's family trust is a general
partner and majority owner engage the Company and its
subsidiaries to perform real estate services for which fees and
commissions are paid at standard rates. Mr. Hanauer is the
trustee of such trust. One such partnership has listed its
property for sale with the Company and, upon sale, real estate
commissions will be payable to the Company. Another such
partnership paid the Company approximately $22,000 in real
estate commissions in connection with sale of its property
during 1994, and has engaged the Company to perform services
related to purchase of a property, for which real estate
commissions will be payable to the Company. Another such
partnership entered into agreements with the Company and its
subsidiaries in February 1995 pursuant to which the Company and
its subsidiaries will manage and lease a building owned by the
partnership, for a monthly management fee of the greater of
$2,250 or 3% of gross rent collected, and for construction
management fees and leasing commissions at standard rates.
AUDITORS
The firm of Ernst & Young, LLP, certified public
accountants, served as auditors of the Company for the 1994 and
1993 fiscal years. On January 29, 1993, Ernst & Young, LLP was
appointed by the Board as the Company's auditors for 1992,
replacing Coopers & Lybrand, LLP. The decision to change
independent auditors was approved by the Board. In connection
with the Company's 1991 fiscal year, there were no
disagreements with Coopers & Lybrand, LLP on any matters of
accounting principles or practices, financial statement
disclosure, or auditing scope or procedures, which
disagreements if not resolved would have caused them to make
reference to the matter in their report. The audit report on
the Company's financial statements for the year ended December
31, 1991 did not contain any adverse opinion or disclaimer of
opinion, nor was it qualified or modified as to uncertainty,
audit scope or accounting principles.
During the two most recent audited fiscal years, there
have been no reportable events. Although no auditors have been
appointed for 1995, it is anticipated that Ernst & Young, LLP
will be selected as auditors of the Company for the year ending
December 31, 1995. Representatives of Ernst & Young, LLP are
expected to be present at the Annual Meeting, will have an
opportunity to make a statement if they desire to do so and are
expected to be available to respond to appropriate questions.
SUBMISSION OF STOCKHOLDER PROPOSALS
The proxy rules adopted by the Securities and Exchange
Commission provide that certain stockholder proposals must be
included in the proxy statement for the Company's annual
meeting. The Company anticipates that the proxy statement for
next year's annual meeting will be mailed in April 1996 and
that the annual meeting will be held in May 1996. Therefore,
in order for a proposal to be considered for inclusion in next
year's proxy statement, it must be received by the Company no
later than December 7, 1995.
REPORT TO STOCKHOLDERS
The Company's 1994 Annual Report to Stockholders,
containing audited financial statements for the fiscal year
ended December 31, 1994, is being mailed to Stockholders with
this Proxy Statement. Stockholders may request a copy of the
Annual Report from Investor Relations, Grubb & Ellis Company,
One Montgomery Street, Telesis Tower, San Francisco, California
94104.
BY ORDER OF THE BOARD
OF DIRECTORS
/s/ Robert J. Walner
_____________________
Robert J. Walner
Corporate Secretary
<PAGE>
Appendix
PROXY GRUBB & ELLIS COMPANY PROXY
For the Annual Meeting of Stockholders - May 16, 1995
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned, being a stockholder of Grubb & Ellis
Company (the "Company") and having received the Notice of Annual
Meeting of Stockholders dated April 5, 1995 and the accompanying
Proxy Statement, appoints Robert J. Walner and James E.
Klescewski and each or any of them as Proxy Holders, with full
power of substitution, to represent and vote all the shares of
Common Stock which the undersigned may be entitled to vote at the
Annual Meeting of Stockholders to be held at The Clift Hotel, 495
Geary Street, San Francisco, California in the Yosemite Room on
Tuesday, May 16, 1995 at 3:00 p.m. or at any and all adjournments
thereof, with all powers which the undersigned would possess if
personally present.
The shares represented by this Proxy will be voted in the
manner directed herein by the undersigned. If no direction is
made, the Proxy will be voted "FOR" all nominees listed under the
"Election of Directors," all of whom have been nominated by the
Board of Directors as more fully described in the Notice of
Annual Meeting of Stockholders and the accompanying Proxy
Statement. If any of the nominees listed should become
unavailable prior to the Annual Meeting, the Proxy will be voted
for any substitute nominee or nominees designated by the Board of
Directors. The undersigned ratifies and confirms all that said
Proxy Holders or their substitutes may lawfully do by virtue
hereof.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY IN
THE ENVELOPE PROVIDED.
(Continued and to be signed on reverse side.)
<PAGE>
GRUBB & ELLIS COMPANY
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK
ONLY.
The Board of Directors recommends a vote FOR all nominees for Directors.
FOR ALL
(Except
Nominee(s)
FOR WITHHOLD written below)
________ ________ _____________
1. Election of Directors: / / / / / /
Nominees:
Joe F. Hanauer, R. David
Anacker, Lawrence S. Bacow,
Reuben S. Liebowitz, Robert J.
McLaughlin, and John D. Santoleri
________________________________
2. In accordance with the judgments of the Proxy Holders,
upon such other business as may properly come before
the meeting and at any and all adjournments thereof.
/ / Mark here for address change and indicate.
Signature:______________________________ Date:______________
Signature:______________________________ Date:______________
Please date and sign exactly as your name appears
hereon. Joint owners should each sign. The full title
or capacity of any person signing for a corporation,
partnership, trust or estate should be indicated.
